Industrials businesses quietly power the physical things we depend on, from cars and homes to e-commerce infrastructure. They are also bound to benefit from a friendlier regulatory environment with the Trump administration, and this excitement has led to a six-month gain of 19.6% for the sector - higher than the S&P 500’s 15.3% return.
Regardless of these results, investors should tread carefully. The diversity of companies in this space means that not all are created equal or well-positioned for the inescapable downturn. Taking that into account, here is one industrials stock poised to generate sustainable market-beating returns and two we’re passing on.
Two Industrials Stocks to Sell:
FedEx (FDX)
Market Cap: $64.66 billion
Sporting one of the largest air cargo fleets in the world, FedEx (NYSE:FDX) is a global provider of parcel and cargo delivery services.
Why Do We Avoid FDX?
- Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
- Poor free cash flow margin of 2.4% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Diminishing returns on capital from an already low starting point show that neither management’s prior nor current bets are going as planned
At $274.24 per share, FedEx trades at 14.4x forward P/E. To fully understand why you should be careful with FDX, check out our full research report (it’s free for active Edge members).
Vontier (VNT)
Market Cap: $5.23 billion
A spin-off of a spin-off, Vontier (NYSE:VNT) provides electronic products and systems to the transportation, automotive, and manufacturing sectors.
Why Is VNT Risky?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Estimated sales for the next 12 months are flat and imply a softer demand environment
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Vontier is trading at $36.04 per share, or 10.8x forward P/E. Read our free research report to see why you should think twice about including VNT in your portfolio.
One Industrials Stock to Buy:
Powell (POWL)
Market Cap: $4.07 billion
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Are We Backing POWL?
- Market share has increased this cycle as its 25.7% annual revenue growth over the last two years was exceptional
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 86.5% annually, topping its revenue gains
- Free cash flow margin increased by 21.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Powell’s stock price of $339.98 implies a valuation ratio of 21.2x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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